Case Analysis: “L’Oreal: Global Brand, Local Knowledge”
Following are few key takeaways form the L’Oreal Case:
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Advantages of investing in R&D:
o Helps to increase the brand credibility
o Helps in innovating new products and filing patents
o Improving Customer Perceived Value
o Helps in better differentiating products
Investing in R&D also has few of the disadvantages such as :
o Increase in product cost
o Due to the increase in cost, products are often perceived as expensive and out
of each by the customers
A company can expand its international and local reach by:
o Acquiring local companies. E.g. L’Oréal acquisition of Maybelline in the US,
Chilean Company in Unisa, Jade in Germany
o Not adhering to geographical boundaries of products. E.g. L’Oréal to increase its
market presence and international reach started selling the products which
were developed for specific region
To avoid cannibalization of a company’s products it is very important that the company
positioned its products category appropriately. Each of these product category needs to
have a separate marketing division which should not interfere with position of other
product category
Due to globalization, companies can easily sell their products across countries but to
increase their market share it is important the company understands their local
customers, as people of different countries have their own specific needs, habits, dream
and desires. E.g. L’Oréal started their “geocosmetics” campaign which focused on
studying the beauty trends around the world and deliver the best products for that
region
Advantages of introducing the problem statement of the company as challenges for the
college student:
o Help in gaining a wide range creative ideas to tackle the challenges
o Helps the company in correct talent acquisition
Innovations in digital marketing can provide an upper hand to companies over the
traditional media marketing by enabling them to provide their customer with platforms
to assist them to identify the benefits of their product. E.g. L’Oreal introduce
instructional and training videos, which help customer understand to how-to use the
beauty products
Associating products with celebrity and using entertainment industry to market product
is an effective of way to tap into all ages, races and sexes
The company should be involved in promotional and charity events so as to increase
their popularity and social contribution in order to benefit their image in front of their
consumers.
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https://www.coursehero.com/file/42885497/A-4-LOreal-Global-Brand-Local-Knowledgepdf/
Based on our understanding of the case, following is the SWOT analysis of L’Oreal (as of 2010):
Internal
External
o Highly developed R&D department with
619 patents as of 2010
o Local R&D centres to develop beauty
products
which
are
specific
to
characteristics of local population
o Has good penetration in local markets,
achieved by acquisition of companies such
as Maybelline
o Has good brand diversity with products in
varied price range.
o Has associations with many A-list
celebrities, which endorsers and promotes
L’Oreal products in wide range of age
brackets
o Has adopted digital marketing over
traditional marketing medium to increase
their outreach, while also providing
personalized experience and tips form
experts
Opportunities
o Has opportunities to tie up with local
market player to understand the market
better
o Can leverage its highly developed R&D
sector to get advantage over its
competitors via innovation
o Can indulge in Corporate Social
Responsibility to create a better image for
their brand and improve their credibility
o Can leverage its relations with students in
285 universities spread across 43
countries, to understand consumer
behaviour of their future potential
customer
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Positive
Strength
Negative
Weakness
o Due to large brand diversity, L’Oreal may
face the challenge of cannibalization
o Has to develop multiple marketing strategy
for the same product while introducing the
same product in different markets
o Products are often perceived as expensive
and out of reach
Threats
o Faces tough competition form brands such
as P&G and Unilever
o Compare to P&G and Unilever, L’Oreal has
a lower advertising budget
o Faces tough competition from local rivals
especially in emerging markets
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Recommendations based on SWOT analysis:
• As identified in the opportunities, L’Oreal can indulge in CSR activities in order to
improve its brand image and remove the perception of people that the L’Oreal
products are expensive and out of reach
• L’Oreal can focus more on developing products that are tailored to each part of the
world, which can in turn remove the perception of it being the foreign brand and build
its reputation as more of a regional brand
https://www.coursehero.com/file/42885497/A-4-LOreal-Global-Brand-Local-Knowledgepdf/
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